The primary method through which business owners form or incorporate their firm is through business registration. Because India has so many different sorts of businesses, entrepreneurs must choose one that best suits their operations. The Companies Act, 2013, establishes criteria for several types of business registration in India. The taxes one must pay, the compliance procedures business must take, and the eligibility criteria one has to fulfill will all be determined by the organisational structure you chose. As a result, determining what form of business registration to conduct in India is one of the most important decisions an entrepreneur can make. Furthermore, the Indian legal system permits the formation of many types of businesses. They are:
Private Limited Campany Registration
Private Limited Company registration
is ideal for small enterprises that need to register as a separate legal
entity. To protect their own assets, a group of shareholders divides the
liability amongst themselves in this form of business. The entire capital of
such businesses is equal to the sum of all the shares held by each company
member. In addition, the members' personal and corporate assets are treated
separately, giving for greater safety and security. Shares in such a firm
cannot be traded or transferred publicly. According to the
Companies Act of 2013, a private limited company must meet the following
criteria in order to be qualified for this type of business registration:
- · There
should be a minimum of two and a maximum of fifteen directors.
- · One
of the directors must be a resident of India.
- · There
must be a minimum of two shareholders or members and a maximum of 200.
- · An
authorised capital fee of at least INR 1 lakh is also required.
- · A
registered office address in India is required.
Public Limited Company
A Public Limited Company is one in which
members of the general public can buy shares. There is no limit to the number
of shares that can be sold or traded in such businesses. Because the company's
shares are listed on the Stock Exchange, they can be freely traded, making the
shareholders part-owners. Before beginning business operations, such businesses
must obtain a Certificate of Registration from the RoC. Furthermore,
according to the Companies Act of 2013, a public limited company must meet the
following criteria in order to be qualified for this type of business
registration:
- · A
minimum of three directors is required.
- · One
of the Directors must be a resident of India.
- · A
minimum of seven stockholders is required, with no upper limit.
- · Additionally,
an authorized capital fee of at least INR 5 lakhs is required.
- · Furthermore,
a registered office address in India is required.
Partnerships
The activities of Partnerships are managed by
partners who have agreed to their roles and share in the profits. As a result,
in a verbal contract known as the Partnership Deed, the tasks, duties, powers,
and number of shares held are all clearly established. Additionally, the Indian
Partnership Act of 1932 applies to these businesses. As long as they have a
legal and registered Partnership Deed, partnership firms can operate with or
without a licence. Most partnerships, on the other hand, do register since it
offers them more privileges. Furthermore, the partnership must meet the
following criteria in order to be qualified for this type of firm registration:
- · A
minimum of two and a maximum of ten partners are required.
- · Furthermore,
the company must have a registered office address in India.
- · In
addition, all partners must sign a recognized Partnership Deed.
Limited Liability Partnership (LLP) Registration
Limited Liability Partnership Registration,
also known as LLP, is a new type of company in India. Furthermore, it has a
separate legal status, allowing the entrepreneurs to distinguish between
personal and business assets and providing them with limited liability
protection. The liability of each partner in such firms is determined by the
number of share capital, which provides more protection than a Sole
Proprietorship. Furthermore, the LLP must meet the following criteria in order
to be eligible for this type of business registration:
- · Minimum
authorised capital of INR 1 Lakh
- · An
Indian resident must be at least one of the designated partners
- · Two
partners minimum and no maximum number limit
- · If
the rest are companies, at least one individual partner is required.
- · No
share capital requirement since the contribution must be accepted by each
partner
One Person Company (OPC) Registration
One Person Company is the newest addition to the several types of company registration available
in India, and they are ideal for small firms. It was also included in the
Companies Act of 2013 to assist entrepreneurs who want to run a firm on their
own. Entrepreneurs benefit from liability protection without needing to partner
with anybody else because such a firm type has its own legal position.
Furthermore, because they only involve one person, this sort of business
registration is simple to set up and manage. Furthermore, this is effectively a
hybrid of the Sole-Proprietorship and Company commercial entity models. In
addition, the One Person Company must meet the following conditions in order to
be qualified for this type of business registration:
- · A
minimum of INR 1 lakh in authorised capital is required.
- · A
person must also be a naturalised Indian citizen and a resident of India.
- · During
the incorporation process, the promoter must appoint a nominee.
- · Furthermore,
financial businesses are not permitted to form an OPC.
- · If
the paid-up capital or turnover surpasses INR 2 crores, the company should
convert to a Private Limited Company.
Sole Proprietorship Registration
Sole Proprietorship Registration
is another sort of business in which a single person handles the management of
the company. In this company type, however, the company and the owner are
regarded as one company and are solely liable for profits and losses. As the
registration bears the names of its owners, the name of the owner is also
included in the tax filings and accounting reports, which lead to unlimited
business liabilities. Consequently, there is no separate business registration
process for this type of company.
Section 8 Company Registration
Section 8 companies
are commonly called a non-profit organisation, and work primarily for
charities. It also supports the promotion of arts, science, literature,
education, the care of the needy and environmental protection. Furthermore, all
the profits generated by such companies are used to achieve these goals and the
members do not make their own dividends. The Section-8 Company must meet the
following criteria to qualify for this type of company registration:
- · A
minimum of two stockholders is required.
- · A
minimum of two Directors is required, and they can also be stockholders.
- · One
of the Directors must be a resident of India.
- · There
is no requirement for a minimum amount of capital.
- · Furthermore,
a registered office address in India is required.
In India, under the Companies Act 2013, no business
registration can be recognised as a company until it is registered with the
registrar of companies. A company does not become a separate legal entity from
its members until it is registered. As a result, registering a company is
a significant and critical step.
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